Nostra Terra Oil & Gas Company PLC Permian Basin Farm-in Agreement (5517Z)
September 21 2020 - 2:00AM
UK Regulatory
TIDMNTOG
RNS Number : 5517Z
Nostra Terra Oil & Gas Company PLC
21 September 2020
21 September 2020
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Permian Basin Farm-in Agreement
Nostra Terra (AIM: NTOG), the oil & gas exploration and
production company with a portfolio of development and production
assets in Texas, USA, is pleased to announce a farm-in agreement
targeting immediate production in the Permian Basin.
Highlights:
-- Targeting near-term production and cashflow
-- Low risk opportunity
-- Minimal cash outlay
-- Commercially attractive by using existing drilled well that never completed
-- Prolific basin
-- Shallow, conventional oil
-- Existing producing asset
-- Targeting upside through recompletions
-- 15 existing wells (8 active producers, 1 Salt Water Disposal, 6 inactive)
o 3 planned recompletions
-- 6 additional potential drilling locations
Farm-in Agreement
Nostra Terra has signed a farm-in agreement with a consortium of
local owners/producers for three leases in the Permian Basin (West
Texas). The Company will pay a US$25,000 fee at closing, followed
by US$100,000 towards the initial re-entry of the first well
planned for completion Nostra Terra will earn 50% of the net
cashflow for the life of the well. Nostra Terra will then have the
right to acquire a 75% WI , at any point prior to 31 October 2021,
in all three leases, for an additional US$210,000 to the seller.
Additionally, after the initial completion but prior to exercising
the option to acquire, the Company can elect to perform another
recompletion, prior to 30 September 2021, for a further $100,000 in
a subsequent well of its choosing, where the Company would earn a
75% working interest ("WI") in the that well.
Asset description
The assets include three adjacent leases, (currently producing
circa 4 bopd), all of which are Held By Production ("HBP") , hence
the leases will continue with no relinquishment obligations due to
the existing producing wells, and production facilities. The
primary producing formations are the Permian Clearfork and San
Andres, which typically exhibit low operating costs and stable
production in this region.
The production facilities have a current storage capacity of 900
barrels of oil which will give Nostra Terra the ability to increase
production whilst minimising spend on new facilities thus allowing
oil to be sold immediately.
The leases are approximately 6 miles from Nostra Terra's 'Twin
Well' (G5) in Mitchell County, Texas, which reached payback on
investment in less than 1 year. The first recompletion will be
performed on a well that was drilled in 2008, but prior to being
completed, oil prices fell substantially and the operator suspended
operations and investment. Nostra Terra will be re-entering the
existing wellbore and completing the well in the same target
formation and using the same completion techniques used in the Twin
Well. All production facilities are already in place, including the
purchase contract for oil. Preparations for the recompletion are
now underway. Upon completion Nostra Terra will benefit immediately
from increased cash flow in a success case.
Matt Lofgran , Nostra Terra 's Chief Executive Officer,
said:
"We're excited to add another opportunity to our portfolio that
could have a significant impact in a very short period of time,
with multiple additional opportunities to follow up at our
election, while still holding further development opportunities.
The transaction is structured in a way that minimizes both risk and
cash outlay further providing leverage into a larger asset.
We now have a portfolio of three different areas of operations
in; the Permian Basin (West Texas), Pine Mills (East Texas), and
Caballos Creek (South Texas), all of which provide stable cashflow
with upside development opportunity.
Earlier this month we announced the acquisition of the Caballos
Creek oil field, followed by Cypress preparing to drill the new
well at Pine Mills in October, and now the new opportunity in the
Permian Basin. With these three distinct areas of activity we are
in the process of turning 2020 into a strong year for Nostra Terra.
We continue to screen new opportunities for growth and look forward
to continued value accrual for shareholders."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014
For further information, contact:
Nostra Terra Oil and Gas Company
plc
Matt Lofgran, CEO Email: +1 480 993 8933
Strand Hanson Limited
(Nominated & Financial Adviser and
Joint Broker)
Rory Murphy / Ritchie Balmer / Jack
Botros Tel: +44 (0) 20 7409 3494
Novum Securities Limited (Joint
Broker)
Jon Belliss
Tel: +44 (0) 207 399 9425
Lionsgate Communications (Public
Relations)
Jonathan Charles Tel: +44 (0) 7791 892509
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